Business groups unite to oppose devolution of business rates to councils

Business groups have united to oppose devolving power over business rates to Scotland’s councils.

Twenty-seven groups including the Federation of Small Businesses, CBI, SCDI, Scottish Chambers of Commerce and trade organisations from sectors as diverse as hairdressing, gardening, engineering, tourism, bookselling and food and drink have written to MSPs calling for the uniform business rate to be retained in Scotland.

Labour, Conservative and Green MSPs on the Local Government and Communities Committee voted for an amendment to the Non-Domestic Rates Bill proposed by Green MSP Andy Wightman to hand over control of business rates to councils rather than have them set centrally by the Scottish Government.

This means that business rates and rates reliefs could vary in each of Scotland’s 32 local authority areas rather than there being one rate across the whole country.

Businesses fear that with councils struggling for funding, this could lead to a rise in business rates as well as complications for businesses dealing with the differences across different council areas.

The letter says: “We are writing to you ahead of stage three of the Non-Domestic Rates (Scotland) Bill to voice our alarm and shared concern over recently adopted amendments which seek to scrap the uniform business rate and instead hand control over this £2.8 billion tax to each of the 32 local authorities to set their own poundage rate, rates reliefs, and any supplements or surcharges.

“Our ambition is for a competitive rates system and one that better reflects economic and trading conditions. It is why we have supported the thrust of the bill.

“However, we are profoundly concerned with the abolition of the uniform business rate and Scotland-wide rates reliefs, and the consistency and predictability they bring.

“We fear this could lead to higher business rates bills, at a time when the poundage rate is already at a 20-year high and with a further increase pencilled in for this spring, and when businesses want to invest and grow the Scottish economy.

“We therefore urge you and fellow MSPs to overturn these amendments, which simply introduce fresh complexity, cost and unpredictability into the rates system, and which are at odds with the rates reform agenda of ensuring competitiveness and minimising complexity.”

The call to retain national business rates has been backed by public finance minister Kate Forbes.

In an open response to the letter from business groups, she said: “The Non-Domestic Rates (Scotland) Bill was introduced to support growth, improve the administration of the system and increases fairness as envisaged by the Barclay Review of Non-Domestic Rates.

“It is clear from the strength of feeling of Scottish businesses as expressed in your letter that the bill, as amended by the Conservative, Labour and the Green parties, does not currently do so.

“I am writing to confirm the Scottish Government’s unequivocal support for the uniform business rate.

“The Scottish Government shares your collective view that the amendment supported by opposition MSPs at stage two introduces complexity, risks and potential unpredictability into the rates system.”

Forbes committed the Scottish Government to opposing any amendments that moved away from a uniform business rate and said she had written to the opposition parties asking them to support that.

Forbes added: “In a few short weeks, all MSPs will have an opportunity at stage three of the bill to respond directly and immediately to the concerns of Scottish business.

“In the meantime, I will continue to liaise with my parliamentary colleagues to persuade them of the critical need to listen to those concerns and reverse this unwelcome amendment.”